Business expenditure deduction failed where the assessee could not prove trade purpose, and the challenged document was found non-genuine.

A deduction under section 10(2)(xv) was refused because the assessee failed to prove that the settlement payment was wholly and exclusively incurred for the purposes of trade; the Tribunal found no trading relationship, no advance of money, and no finance-supply agreement, and that factual finding was upheld. The challenge to the finding that the memorandum of oral agreement dated 1 March 1947 was not genuine also failed, because the Tribunal had material to assess the document's origin, execution, and surrounding circumstances as a whole. The High Court reiterated that a finding of fact on reference will not be disturbed unless unsupported by evidence or perverse.

---

---

Issues: (i) whether the sum of Rs. 4,25,000 paid in settlement was an expenditure wholly and exclusively laid out for the purposes of trade and deductible under section 10(2)(xv) of the Indian Income-tax Act; (ii) whether there was material before the Tribunal to support the finding that the memorandum of oral agreement dated 1 March 1947 was not a genuine document.

Issue (i): whether the sum of Rs. 4,25,000 paid in settlement was an expenditure wholly and exclusively laid out for the purposes of trade and deductible under section 10(2)(xv) of the Indian Income-tax Act.

Analysis: The claim for deduction depended on proving that the payment was a business expenditure incurred for the purposes of trade. The Tribunal found, on the materials produced, that there was no trading relationship between the assessee and the other party, no advance of money, and no agreement for the supply of finance. The burden of establishing the facts necessary for deduction lay on the assessee, and the High Court could interfere only if the finding was unsupported by evidence or perverse. On the record, the Tribunal's conclusion remained one of fact and not of law.

Conclusion: The payment was not shown to be deductible under section 10(2)(xv), and the finding against the assessee was upheld.

Issue (ii): whether there was material before the Tribunal to support the finding that the memorandum of oral agreement dated 1 March 1947 was not a genuine document.

Analysis: The Tribunal relied on several circumstances, including the manner in which the document came into existence, the absence of satisfactory proof of execution, and the surrounding relationship between the persons concerned. The proper approach was to assess the cumulative effect of all the facts, not to isolate each circumstance. Viewed as a whole, the materials were sufficient to sustain the inference that the document was not bona fide.

Conclusion: The finding that the memorandum was not genuine was supported by material and could not be disturbed.

Final Conclusion: Both questions were answered against the assessee, and the reference was resolved in favour of the Revenue.

Ratio Decidendi: A Tribunal's finding of fact will not be disturbed on reference unless it is unsupported by evidence or is perverse, and a deduction for business expenditure under section 10(2)(xv) is allowable only when the assessee proves that the payment was incurred wholly and exclusively for the purposes of trade.

---